Mandelson Misses the Point: Why Did the Money Run Out?

By Iain Martin

Look, the Dark Lord is back. After his longest silence since 1983 (four weeks), Lord Mandelson has popped up with a piece in the Times. He is completing a new book on his life and times. Expect a few fireworks, some fun and ample score settling.

Reuters

But as he contemplates the post-election landscape and muses on the future of the party he loves, it is clear that he, like the various leadership contenders, is not yet prepared to confront the central questions. Why had the money run out at the end of 13 years in power? How is Labour going to come up with a means of ensuring that it doesn’t do the same again and, in the process, convince voters it has learned a lesson? This — rather than what plans the party has to revivify the progressive tradition with a fresh concern for social justice — is what will worry a great many realistic voters in the seats that Labour needs to win.

Of this, there is nothing in the Dark Lord’s piece in the Times. In its place, he plays several of New Labour’s “greatest hits.” It all sounds very early to mid-1990s. Like listening to early album tracks by Blur or seeing an aged clip of Chris Evans and Gaby Roslin presenting “The Big Breakfast”:

“While I understand why the term new Labour may cease to be used by a new generation of potential Labour leaders who rightly wish to move on from the past, the concept that new Labour represents should not be cast aside so easily. New Labour is not an affectation or a marketing tool that enabled us simply to win elections.

It is more fundamental than that. It is, and was, a logical flow from the revisionist, social democratic tradition in our party — the tradition that applies the timeless values of our party afresh to new times; that believes the Left should concentrate on the ends — a strong economy, social justice and high-quality public services — but should always be willing to consider new means of achieving those ends.

It is about Labour not being a party of class or sectional interest, but about being a broad-based party of conscience and reform. An outlook that remains in tune with the priorities and ambitions of families across the country. Open, not tribal. Pluralist, not statist.
But it is also a mindset that is, above all, governmental. Which recognizes that democratic power is the only route to implementing our values, and that very difficult policy choices — such as those raised by the deficit — cannot be ducked.”

Hmmmmm… bit thin really, when considered in the context of the national debt doubling and then getting ready to almost double again.

I posted recently that the most curious feature of the Labour leadership race is that no candidate has chosen to run against Gordon Brown, or against the analysis he made dominant in Labour that ever more spending was possible in perpetuity because boom’n'bust had ended. (It hadn’t. Boom went bust and boombanga boom went the public finances.)

It is not really going to be possible to get through the next few years, if the party is even semiserious about winning, without some attempt to embrace notions of fiscal responsibility. If not, the conversation with the switched-on swing voter in Milton Keynes South in 2015 goes something like this:

Voter: “Right, if I give Labour another chance, what’s to say that you won’t do it again? As in spend all the money and leave a financial mess behind for the other lot of shakedown artists to clear up?”

Labour canvasser: “Erm… it was clear by the late 1990s that we needed to invest heavily in public services, which we did, resulting in hundreds of shiny new hospitals, or was it shiny nurses and teachers, and the rest of the public sector… and…”

Voter: “Yes, yes, I understand that. Here in this marginal seat I voted for Tony Blair in 1997 and 2001. But did you have to spend quite so much? All of it? So that there was nothing left?”

Labour canvasser: “Er…”

Voter: “So that when the wind changed, when the boom duly turned to bust as it tends to in life, we were up the creek minus a paddle? Do you understand? What have you learnt, what’s the approach next time if you get in? That’s what I want to know.”

Labour canvasser: “Er… we remain committed to more investment in public services?”

Comments (5 of 6)

Talking about whatever 'good' labour may have done is facile because it was all done on borrowed money they knew they could not pay back. So the 'good' now is undone by the need to make cuts and raise taxes.

Mr Macawber would have made a better chancellor than Brown.

3:32 pm June 3, 2010

Stu wrote :

Iain - I don't think Mandy's central point was that thin when looked at through the prism of Labour Party history. He's repeating a much-missed point made by Crosland and Gaitskell, namely that the ends are important when it comes to socialism, not the means. Social mobility is woeful, our balance of trade is dire, our infrastructure is creaking and we are no nearer to being energy independent than we were 10 years ago. For instance, I have no problem with free schools as a potential end for improving education in this country - particularly if the new schools are in poorer areas.

You're right that the fiscal situation needs addressing - and you're right that it would be refreshing for the Labour Party to admit mistakes were made with the public finances. But the problem with ceding this ground to the Tories is that they will always be more conservative fiscally than other parties - so can never be outflanked. Tories can only be outflanked by Labour stating they it's raison d'etre is to help poorer people.

What all of the parties need to realise is that:

1) We need the most educated, creative workforce in the world to compete with the emerging economies
2) To support 1) we need a radically improved infrastructure (bandwidth, public transport & high speed rail)
3) We need energy independence and we need it double quick. By 2050 the world's population will reach 9.2bn. The demand for clean energy is going to go through the roof and Britain needs to be at the forefront of the greening economy
4) We need to promote economic growth - but also to make sure it's sustainable (i.e. balanced, with high value add jobs in manufacturing, design etc.)
5) We need better social mobility and fewer people subsisting on out of work benefits.

To achieve all of these goals the government will need to raise some taxes, cut others and take away some services to pay for investment in infrastructure and schools. This is the critical point that no party has even started addressing.

2:58 pm June 3, 2010

Iain Martin wrote :

SK, thank you. But that's really quite a curious response. What you mean is that boom turned to bust. It always does, so best prepare for it and best to run a surplus when growth is powering ahead. That way, when the weather changes you can cope with the consequences without running up a massive debt and spending valuable tax receipts for the next twenty years on servicing that larger debt.
Alex, thanks. But even more bizarre. All western governments left or right had the same problems? No, they didn't. Completely straight up and down wrong. Germany went into this with a small deficit, which has gone up a bit. It will come out of it with a relatively small deficit again. Australia ran a surplus in the good times, for which it is grateful now.
This isn't necessarily a left right issue as both of you assume. There is a centre-left argument for fiscal responsibility. Don't want to be at the mercy of the money markets? Don't borrow so much, don't spend so much you haven't earned. Bill Clinton ran against Bush I as a fiscally responsible Democrat. And he was rather successful electorally.

2:05 pm June 3, 2010

SK wrote :

It's interesting that you say Labour 'left a financial crisis behind'. Strictly speaking, that may be true, but you're confusing cause and correlation. There was an enormous, pant-wettingly serious global economic crisis. The cost of fiscal stimulus and rescuing the banks sent an average, middle sized deficit over a cliff - but it had to be done. The press narrative that "we had no money because Labour spent too much on schools and hospitals" just doesn't wash. If the choice is between a bigger deficit or the mass unemployment that the US has seen, I'd choose the deficit. Fortunately, the Coalition is about to see to it that we don't have to choose.

1:55 pm June 3, 2010

Ian E wrote :

'Ifyou specifically, and the the right generally, including David Cameron, really believe that Labour is/was the problem then, with the election of a different party, it should be solved: no need to do anything…'

Rather simplistic!! Suppose your bank manager defrauds you of your house, your savings and your car - are you really suggesting that changing to another bank will solve all your problems? Oh and by the way, Cameron is not on the Right (any more than Blair was on the Left)!